McDonald's coffee guy; why complainers are hot

Bad coffee. For Melburnians, it is one of the sins along with disinterest in the weather and the absence of black clothing.  And so, McDonalds has launched its attempt to win custom back from people disgruntled by their burnt beans and insipid froth. Complaints, or more likely, declining sales have pushed McDonalds to admit it was dishing out bad product. 

Have you come across the TV ad?  It centers on a gentleman seen arguing with a bus driver. The scene is set that this fellow lives for complaining.  And yet, there he later sits enjoying a McDonalds brew without complaint.

What I find interesting about the ad is the portrayal of complainers.  This guy is a world weary, grey skinned, relatively unattractive man. Whilst McDonalds could have snaffled Hugh Jackman or a Cleo bachelor to play the role, that would have confused the message. McDonalds are inferring that complaints are an ugly behaviour, and that complainers are unattractive.

This is an interesting heuristic that is entrenched in most businesses.  The link between "complaints = problem = negative = cost = seek to eliminate" is extremely strong.  And this is where a fear of social media rears its head.  As long as you see complaints as a negative thing to be reduced, you are cutting yourself off from the best market feedback you can get.

 I know, I know.  You are going to say that customers are your priority, you take them seriously and you even monitor satisfaction.  But I would guess that the governing bias is still that when a complaint is received, it is seen as a problem for your business, not an opportunity.  Why?  Two principles from Behavioural Economics are at play.

Not Invented Here Bias - we have a tendency to shun the ideas of others. Working as a product manager, I certainly fall into the trap of thinking I know more than my customers...and I do, but about what the widget should do, not how that customer is experiencing it.  My subjective view must not blind me to the relatively objective view offered by the customer.

Status quo bias - it's more comfortable for us in the status quo.  A complaint might mean we have to step out of our rut and life might get more challenging. But here's the thing. Status quo is a misnomer in any market; you cannot stay stagnant because the world is not, and the complaints you receive are the market's way of telling you to get moving.

So here's my challenge to us all. When you next receive a complaint, I want you to imagine the person has the charm and looks of Hugh Jackman rather than the washed-out McDonalds man.  And I want you to take a deep breath, relax your shoulders, and absorb the gift of real-life market feedback.

PS as an aside, McDonalds is offering a free replacement coffee if you are dissatisfied with the brew.  A classic example of overcoming loss aversion by convincing customers they have nothing to lose (except of course their time).

Image from: http://static.rbi.com.au/Uploads/PressReleases/hosp/thumbnails/Images-20110602/Maccas2.jpg

Slapping the post; our need for completion

Slapping the post, tapping the fence, smacking the wall...I've seen runners do them all.  On Saturday a lady jogged up to the fence post, patted it once, and turned for home.  I've caught myself doing this when visiting a scenic location - walking to and touching some part of the landscape before leaving.  What does this have to do with business and Behavioural Economics?

We are geared for completion.  Humans like to finish, to see things through. In the case of running, it can mean physically marking your progress by slapping the post.  In a business context,

- If you manage staff, this means that when they resign or are reassigned from a project mid-stream, you would do well to have them conclude their contribution in the form of a presentation to you or other staff.  A handover session is not the same thing - ask them to formally present what the project is, what they did, and what is left to do. Why? Psychological closure for you and them.  Motivation will take a hit it you do not take steps to close-off the work.

- If you provide a loyalty program (like a coffee card) for customers, start them with points/stamps because they will be more compelled to finish the card.
- If you provide merchandise, offer things in collector's sets to compel people to attain them all. (You can look to fast food outlets for examples of this)

So when next devising a project or marketing activity, remember to include the compelling nature of completion to your thinking, making the most of our need to slap the post.


Picture from http://gpblogs.typepad.com/.a/6a00d83455b5de69e2010536a81da7970c-800wi

What can we learn from the magic of public holidays?

It's probably true that most workplaces are a happier place on Fridays.  People look forward to the promise of the weekend, sharing plans for two precious days away from the office. But as good as Fridays can be, that's nothing compared with a P-u-b-l-i-c H-o-l-i-d-a-y!  Public holiday long weekends have a magic about them that is hard to rationalise.  We use them to shape our year, punctuating the monotony of a Monday to Friday work week, and counting down the days as they approach.  And even once enjoyed, there lingers a "short week" psychological benefit upon return to work.

At the risk of over analysing something that may be obvious, what might Behavioural Economics say about our love of public holidays? After all, in purely rational terms, you can take day of annual leave and make it a long weekend anytime. Even better, this means you avoid having to battle crowds and service surcharges. 

Well, part of the enjoyment of public holidays is herding.  Unlike a self-made long weekend, a public holiday long-weekend is shared by many. Whilst this invariably creates crowds, it also creates enormous sense of collective enjoyment that you simply cannot generate otherwise.  Part of the magic is the collective anticipation of the long weekend.

But a larger part of our love of public holidays is that they are 'free'. Public holidays are free days, like unexpected bonuses. We don't have to earn them like annual leave, nor spend them.  There's no risk, no loss, no guilt.  In a sense, the opportunity cost is low. Compare this with a normal day of annual leave where the opportunity cost may be high because what you are trading is the flexibility to take that day at another time.

This is part of the challenge businesses face with staff who do not take sufficient of their annual leave entitlement.  For the business, they carry a large liability. For the staff member, they risk wearing themselves out.  Behavioural Economics might suggest that this is in many ways connected to 'loss aversion' where we don't want to 'lose' our accumulated leave balance; that annual leave is so precious that we only want to 'spend' it on something worthwhile.

So how can we as marketers and business managers apply lessons from the magic of public holidays?

Most obviously, consider time as a reward.
- For staff, an early knock-off time or even an occasional day off in recognition of great performance is probably worth more than any financial reward.
- For marketers, imagine a competition which gave the winner paid leave and/or a temporary resource for their employer to use whilst they kicked up their heels?  Or others like providing laundering or cleaning services to increase free time.

And more broadly, work on the building blocks of public holidays; they are diarised, well known and anticipated by many, offering freedom from the everyday schedule.  Weaving these elements into your staff management or promotional activity may give you a chance at capturing some of the public holiday magic. But most importantly, consider what loss you are eliminating. Make it guilt free and you should find success.

The going-to-work side of the street

"We located (our stores) in lobbies and on the going-to-work side of the street".

I just finished CEO Howard Schultz's 1997 book "Pour Your Heart Into it: How Starbucks Built a Company One Cup at a Time" (and no, I did not start reading it in 1997 smartypants) and the simple statement above is one that really resonated.  The going-to-work side of the street.  Simple, uncomplicated language to distill the key to Starbucks store location decisions and which speaks volumes about the clarity of Starbucks' mission to gain its audience.

So what's your going-to-work side of the street for your shop, your website, your sales pitch, your product, your marketing message? What need are you trying to serve? Where will your traffic be coming from? What will your potential customers be doing when you try to interrupt them?  Are you on the right side of the street?

Headcount freeze: How behavioural economics can help

Inevitably at some stage or another you won't have, or cannot have the level of team resourcing you believe you need. You catch your team muttering about "being two heads down" and morale's on the slide.  As many Australian businesses inch towards the end of financial year, deferring recruitment of staff to maximise financial results, what lessons can we draw from Behavioural Economics to improve matters?

Behavioural Principles to Apply

Social contract - it can be tempting to ask staff to work above and beyond for the good of the team, applying social norms to a work relationship. But you can't have it both ways - if you expect staff to go above and beyond, they'll expect you to protect them. Any cuts will breach the social exchange and further impact morale.

Completion - we innately seek to complete tasks. If you have to stop projects, reallocate priorities make sure you give your staff the opportunity to close-out the activity. Get them to do a final status report even if the project is pulled mid-stream because scrapping the project in front of their eyes is deeply disheartening.

Framing - due to the strong sense of "loss" of staff, you will need to reframe the team. Shake off the absence of these resources by changing the physical surrounds so that the empty desks are not a reminder. And do more team driven activities to make the sum of parts a greater whole.

Case studies

Have you ever noticed when someone leaves, parts of the job they used to do just fall away? Even when two people are doing the same job they will focus on different aspects.

In a headcount freeze scenario, you want to have the non-essential elements of the jobs people get busy doing, fall away. That means bringing to a conclusion some 'pet' projects that people invariably develop.

Now, it's easier said than done to stop a staff member working on something they enjoy, particularly when it will generate benefits for the business. You'll need to be aware of the Ikea effect (discussed by Dan Ariely in both Predictably Irrational and Upside of Irrationality), where we overvalue something because of the effort we have contributed. It means that the project that your staff member has worked so hard on will come with significant emotional attachment.

Use your knowledge of completion (our drive to see things through) to have the staff member provide a final status report even if the job is midstream so at least in their eyes, their work has been acknowledged and concluded.

This post is an extract from "22 Minutes to a Better Business, How behavioural economics can help you tackle everyday business issues", by Bri Williams.

Image from http://www.bizydeal.com/wordpress/wp-content/uploads/2011/04/empty-desk_5.jpg

End of the world as a S.M.A.R.T. goal?

In amongst Charlie Sheen's latest antics and the latest football scores, you may have noticed that the world was meant to (begin to) end yesterday, 21 May 2011.  That's why I held off posting till now.

The good news is that the 21 May was only judgement day...the end of the world is actually slated for 21 October 2011.  Five months to count down people.

The man behind this prediction is a preacher called Harold Camping who stated that on 21 May those worthy would be taken to Heaven by Jesus whilst the rest would be left to endure the end of the world over the next 5 months.  The prediction was based on some...interesting...mathematical gymnastics (see below for the calculation).

Now, rather than dwell of the religious aspects of this prediction, I thought I would instead dig into both the behavioural and goal setting aspects of this event.  What techniques did radio station owner Camping use to grow his subscriber base stimulate worship?

Behavioural principles
Loss aversion: We have an aversion to loss and will be motivated to take steps to avoid it.  In the drive for members, Harold Camping was putting the mother of all losses up for consideration - the loss of your life.

And to ensure he helped people over the line, Camping applied an old favourite marketing technique across a reputed 2000 billboards; "Judgment Day 21 May, 2011. The Bible Guarantee's it".

Anchoring: Camping used a specific date to fix people on his prediction.  The specificity of the date (and the 'complicated' calculation) gave it a marketing and media focus that it otherwise would not have gained.

Herding: Camping created two distinctive groups through this activity; the worthy and unworthy.  Appealing to the sense of pack behaviour, Camping was forcing us to decide between being a part of the Rapture or not (or indeed, between being part of his cult or not).

Status quo bias: Inertia is our default state. In order to tip people out of the status quo, Camping had to come up with something powerful and dramatic.  What better than the end of the world through earthquake and natural horror to convince us to pray?

Goal setting
The Camping prediction can also be used to illustrate one of the classic business tools - S.M.A.R.T. goals.  The theory is that you will maximise your chances of accomplishing your goal if it is specific, measurable, actionable, realistic and timebound. 

Specific: a date (21 May 2011), a name for the activity (Judgment Day), and details of what would happen to those who did not repent helped the prediction gain traction.

Measurable: Camping provided the calculation for the both Judgement Day and the End of the World.

Actionable: Having a deadline is great, but you need to know what you need to accomplish - in this case` it was to pray and listen to Camping.

Realistic: well, this can be debated. However, by quoting scripture, providing crazy date calculations and pointing to real-world events as evidence of the prediction's veracity, Camping convinced many of the realistic nature of his prediction.

Timebound: specifying the dates of judgment and end of the world certainly qualify as timebound.

The ethics of what Camping did aside, you would have to agree that if his goal was to grow his member base through stimulating consideration of his preachings, then it probably worked (albeit temporarily).  Camping's combination of behavioural principles and goal setting created world wide interest in his church and his radio stations.  And whilst this is certainly no lesson in establishing credibility or an ethical or sustainable business model, just imagine the possibilities for your business if one crazy pastor can generate behavioural change in so many. Suddenly that product launch doesn't seem so hard.



The Camping 'calculation'
From wikipedia: Camping taught that the world would end May 21, 2011^[17] using the following reasoning:

1. According to Camping, the number five equals "atonement", the number ten equals "completeness", and the number seventeen equals "heaven".
2. Christ is said to have hung on the cross on April 1, 33 AD. The time between April 1, 33 AD and April 1, 2011 is 1,978 years.
3. If 1,978 is multiplied by 365.2422 days (the number of days in a solar year, not to be confused with the lunar year), the result is 722,449. (This, however, is a rounded number; taken precisely, the figure is 722,449.0716)
4. The time between April 1 and May 21 is 51 days.
5. 51 added to 722,449 is 722,500.
6. (5 x 10 x 17)² or (atonement x completeness x heaven)² also equals 722,500.

http://www.ebiblefellowship.com/outreach/tracts/may21/

http://www.businessinsider.com/end-of-world-may-21-2011-4

22 Minutes to a Better Business, my new book

I have been following what I can of the 'normalisation' Behavioural Economics. By that I mean, how businesses are applying the lessons learnt in the lab about our propensity as consumers to not always act rationally.  To my surprise, I have discovered that there seems to be a gap between the theory, or more precisely, the findings, and instruction on how they may be applied to common business issues.

Headcount pressures, budgets cuts, whether to increase prices/change your service mix/introduce a new fee, closing the sale, losing market share, staff productivity...these are the key issues with which every business grapples.  So where's the guidebook?

Welcome to "22 Minutes to a Better Business: How Behavioural Economics can help you tackle everyday business issues".  I wrote this short book because I believe that Behavioural Economics can deliver better business outcomes for no additional outlay - it's about what we do today, just better.  In the book I cover 18 common business issues, outline the behavioural principles at play, and provide a short case study to illustrate the point. 

And why have I called the book 22 Minutes to a Better Business?  Well, I figure if a show like Two and a Half Men can hold the attention of so many for a run-time of 22 minutes, then that should be my objective too.  I'm asking for you to skip one episode of a sitcom re-run and read this quick dip into Behavioural Economics applied to common business issues...surely you have nothing to lose?

Here's an example of issue number 14; A business that is trapped in an incremental change cycle when it needs to do more.
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Issue #14 Deck chairs: Incremental change when more is needed

It's the talk in the corridors. Why aren't we doing more?!  What can you do to get your business leaping rather than tip-toeing forward? As the saying goes, are you moving deck chairs around on the Titanic?

Behavioural Principles to Apply

Not Invented Here Bias - it is our nature to shun ideas from others because we may not understand them.

Commitment - it's difficult to let go even when things aren't working due to our aversion to loss. You need to cast an eye to where the current course is taking you. Restating your desired future will help you reset your short-term plans.

Group think - odd man out. If theirs is a dissenting view, people will tend to doubt themselves, relent and  go with the pack. Galvanize your allies and raise your voice if you want change.

Short term and status quo bias - making short-term targets through cost cutting or expedient deals can be attractive. If your business doesn't reward longer-term projects then you will need to appeal to non financial reasons like legacy and ego to  secure support.

Case studies

Unfortunately, most businesses tip toe.  Sony fell into this category when they failed to see the rise of MP3 technology.  Yellow Pages have likewise taken too long to move to digital from print.  But it is too easy to judge these businesses in retrospect - at the time the people involved are swayed by the status quo.  It is hard to shape the future, particularly when you are the incumbent.

Pilots are trained to challenge if they see their co-pilot going off course. But in business, fear of "career limiting moves" can stymie dissention.  Train to challenge the status-quo; make it an expectation.

The crew at Intel tackled there need for change by asking "If we got kicked out and a new CEO came on board, what would they do?". When in doubt, think like an outsider and give yourself the same latitude.  Throw off your aversion to loss, your status quo bias, and think like Richard ("I love tackling lazy industries") Branson. 
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How can you get a copy of 22 Minutes? The book is available to purchase on Blurb.com, and is priced at cost until midnight 30 June 2011, after which I will be introducing retail pricing. A preview is available below.  I am also providing a softcopy to the first 50 people who mention 22 Minutes when they connect with me through LinkedIn, so jump to it! 

Most importantly, please spread the word because 22 Minutes to a Better Business is there to be shared.  I hope you enjoy.

Book preview

22 minutes to a better business by Bri Williams | Make Your Own Book